Credit cards are commonly used as a form of payment in retail business transaction. They provide a fast and efficient way to exchange money and track the expenses incurred. One of the drawbacks to the use of credit cards is credit card fraud. Individuals can obtain fraudulent payments from the credit card companies or use them to purchase goods and services by obtaining the account information off of the card.
While the threat of credit card fraud has been well known when dealing with a sales clerk or waiter in person, there has been a rise in credit card fraud arising from transactions at self-service kiosks such as gas pumps, ATMs, vending machines or any other type of device where a customer personally presents a credit card to a machine for payment of a transaction. Here the perpetrator or pirate uses an electronic device to intercept the digital information obtained from the magnetic strip on the credit card. This digital information can then be used to obtain fraudulent payments from the credit card company or illegally purchase goods and services.
Originally the interception of the digital information was done by opening a service panel on the kiosk and plugging in an electronic device that intercepts the digital information while allowing the same information to proceed to the kiosk retailer and carry out the legitimate transaction. The digital information would then be retrieved by the pirate, either wirelessly or by physically retrieving a memory card from the skimmer. This left the card holder, merchant and the credit card company unaware that the information had been stolen until fraudulent transactions are noticed on the monthly statement by the card holder. Tighter security on access to the service panels of the kiosks has greatly reduced this original method of digital credit card piracy.
However, advancements in the pirates' methods have now lead to skimmers which can be installed without opening a service panel on the kiosks. These improved skimmers, as seen in FIG. 1, are inserted into the throat of the card reader in the kiosks. Thus, the pirate installs the improved skimmers by merely walking up to the kiosk and inserting and leaving the skimmer in the card reader. The exterior end of the skimmer is configured to look like a part of the original card reader. The skimmer then reads the digital data from the credit cards at the same time as the card reader obtains the information for the legitimate transaction. Here again the pirate can later obtain the digital information wirelessly or by retrieving the skimmer and its memory card.
The latest generation of card readers rely on obtaining information from a computer chip on the card and not a magnetic strip. Thus, they are not vulnerable to skimmers like the previous generation of card readers. However, the existing millions of credit card readers using the previous generations of technology remain vulnerable to attack by credit card skimmers. These older credit card readers need a system and method which protect them from attack by skimmers.
What is needed, therefore, is a method and device to detect the presence of an improved skimmer in the throat of a kiosk credit card reader.